Cosco Shipping Ports Chancay Peru has asked the Peruvian Government to consider the commitments signed in the Free Trade Agreement (FTA) with China to justify the exclusive use of essential services in the Chancay Megaport, a guarantee that was granted three years ago through the Agreement Directory No. 0008-2021-APN-DIR of the National Port Authority (APN).
Before the Transportation Commission of Congress, the general manager of Cosco Shipping, Carlos Tejada Mera, explained that, when the Chinese-owned company applied for the necessary permits in 2019 and 2020 to make this investment, “a rigorous process was followed and exhaustive”.
“One of the conditions that the private investor requested was that the exclusive use of essential services be granted. This allowed the investment to begin, otherwise, other decisions would have been made about the amount or technology to be used, suddenly, not investing “said the representative.
The problem began when, a few months ago, the Olaechea study presented an observation to the agreement signed by the APN. The institution recognizes, then, that it did not have the capacity to grant exclusivity of services, so the MTC Attorney’s Office filed an administrative lawsuit.
Although initially Cosco and APN acknowledged before Congress a “legal loophole” that allowed the signing of the agreement, now the company asks the Peruvian State to safeguard its international treaties, which by the Constitution, have the status of law. Even MTC had already warned of the situation since January, but it cannot stop the lawsuit from its own Attorney General’s Office. Cosco hinted at a possible international lawsuit.
“This comes from an international agreement that according to the Constitution is part of Peruvian legislation […] It is a 100% private investment and risk, unlike a Public-Private Association (PPP), where the State and private share investment risk,” said Tejada.
“We believe that the APN, at the time, had the sufficient legal framework to grant this exclusivity […] Behind this there is a more serious problem, the State is once again put at risk in the face of arbitrations and the payment of compensation that we normally lose,” he added.
Chancay megaport: the issue of the FTA with China
APN considers that, as it is not expressly permitted in its organic law, it should never have given exclusivity to Cosco in 2021. For Alfonso Rebaza González, legal manager of the company, there is a reservation in the FTA with China that could validate the operation, without need to issue new laws.
“The Peruvian State has signed an FTA with China, and in its article 128 it says that it has the obligation to promote and admit Chinese investments in its territory. The FTA is also a law […] APN did the right thing in 2021, equating private investment with public investment and granting exclusivity. That is not foreign to the Peruvian jurisdictional framework,” the lawyer highlighted.
Rebaza criticized this “catalog model” system of public institutions in Peru, by which only what is expressly permitted by law can be subscribed. He interpreted that, under that criterion, the FTA with China could not be fulfilled either.
“Here comes another article of the FTA, which says that, when there is behavior in a certain sense, a State cannot go back. That Peruvian law, which is the FTA with China, why was it not taken into account by APN and MTC at the time of suing?” he argued.
Precisely, Congressman José Cueto has presented this week a bill to correct the National Port System Law and avoid this type of controversy. However, Cosco knows that the law will not be retroactive, so they seek to subject the contract to the FTA agreements.
“This law cannot be retroactive […] It is impossible for this project, which is more than the port, to continue. They do not give us predictability, I would like to ask the Executive and Congress to find a legal solution that solves this quickly and validate the acts granted within the framework of the FTA. It is something that could be incorporated,” said Admiral Tejada.
“Clearly, it is an international treaty that is being violated […] If you said ‘let’s go ahead with exclusivity’, you can’t say later that ‘it’s no longer going’. They will have to find other ways“, he cut short.
Chancay: Ositrán generates more noise in the port, according to Cosco
Ositrán, for its part, has filed an “informative complaint” with the Indecopi Bureaucratic Barriers Commission to determine whether exclusivity in Chancay represents a barrier of this type. The agency will respond at the beginning of May if the complaint is valid and will have 120 days to resolve, after which a different rate could be established for the terminal.
Cosco also criticizes this situation and points out that they are advancing an opinion when the Chancay Megaport is not yet ready and it cannot yet be determined if there is no competition. At the moment, it is known that MTC relieved the president of the APN board of directors, Walter Tapia, from his position.
“Ositrán generates more noise about the project, it initiates a procedure before Indecopi before the port begins to operate. It is very clear that to determine if there is an absence of competition, it must first operate. Why not wait and determine according to law?”, indicated Tejada.
“In fact, our prices will not be the same as Callao, perhaps they will be a little higher to recover the investment. Our strength will be the quality of services and productivity: instead of having a ship in the bay for 6 days, here they will not wait. “It will be an intense competition,” he said.
Source: Larepublica
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